DHCR change in policy when dealing with Individual Apartment Improvements (IAIs)

Owners need to be aware of Operational Bulletin 2016-1, which replaced Policy Statement 90-10, and the changes under the new Bulletin:

1) DHCR will now consider the “useful life” of IAIs. DHCR Fact Sheet #33 (revised April, 2017) set forth the useful life of many items, both building wide (roofs, boilers) and individual apartment items (apartment doors, kitchen sinks, bathroom vanities) – you need to keep track (and proof — documentation, pictures if a broken item is being replaced before the “useful life” is up) of when items were upgraded as future IAIs may be denied based upon the “useful life” not having been reached before replacement.

2) Owners now need more than one (1) form of proof of payment for IAI work done: Operational Bulletin 2016-1 asks for a higher standard of proof without actually defining it. The Bulletin requires Owner to submit AS MANY forms of proof of payment as they can, among: An invoice or contract, as specific as possible (including full address/apartment of where the work was done, breakdown of all the work by room and actual work with costs for each, checks showing the apartment address where work was done).

3) Proof of Lump Sum payment is more likely to lead to the entire IAI being rejected.

4) Cash payments that exceed $10,000 will now require additional proof: bank documents proving withdrawal of funds; proof of how funds were transferred; affidavits from contractors confirming receipt of payment.

5) Operational Bulletin 2016-1 also includes a partial list of allowable and ineligible IAI improvements, among them: Light fixtures are only IAIs if none existed before; New parquet flooring where none existed before; New dropped and/or sound-proof ceilings; balcony enclosure; security alarm; architect/engineer costs if determined to be required and directly related to the IAI.

KEEP ALL RECORDS REGARDLESS OF HOW LONG AGO THE IAI WAS DONE

To review Operational Bulletin 2016-1, click here.

We caution, however, that interpretation is dependent on the facts of each situation and should be reviewed by an attorney. The foregoing highlights and call to awareness does not constitute legal advice.